Measuring the impact of a half-cent sales tax financing economic development the past 16 years can be examined in different ways, but Kent Heermann boils it down to two photographs.
In 1994, before the tax began, a photograph of land in southeast Emporia shows nothing but grass and dirt. That is how the land had stayed since the city bought it in 1978, said Heermann, president of the Regional Development Association of East Central Kansas.
The second photograph was taken in 2008. It shows company plants, buildings, roads and railroad spurs. In short, it shows what sales tax money can do.
Emporia voters will consider Tuesday whether to extend a half-cent sales tax for economic development and property tax relief from 2015 to 2024.
The tax was passed in 1994 and renewed in 2000. It has raised $11.3 million for economic development since 1995, along with $13.8 million for property tax relief and $2.5 million for the Jones Aquatic Center. All told, about $27.5 million in sales taxes from Emporia purchases has been collected.
While acknowledging the current sales tax of 8.8 percent is expensive, economic leaders are blunt about the consequences of not having the tax.
“Without the sales tax, we would not have Menu, Caterpillar/Camoplast, Norfolk Iron and Hill’s,” said RDA board president and city commissioner Jeff Longbine. “Also we wouldn’t have existing companies expand and add product lines. We would look a lot different today without it.”
Failed bid
leads to success
In 1994, Cessna was considering building a plant somewhere in Kansas to construct piston engines. Emporia was one of the five finalists for the plant along with Manhattan, Independence, Pittsburg and Hays. Independence won out but not before Emporia voters overwhelmingly approved a half-cent, 10-year sales tax increase for property tax relief and industrial development. The tax was supposed to help entice Cessna, but it ended up laying the groundwork for other companies.
“We tied for second on Cessna, but we were fortunate because it led to money for investments,” Heermann said.
Lenze Corp. in 1996 was the first company to build in the industrial park, though it left town 11 years later. Caterpillar became the park’s second tenant, later selling the plant to Camoplast.
Norfolk Iron and Metal steel distribution plant is still operating in the park. And Emporia welcomed in a pair of pet food companies, Menu Food Midwest in 1998 and Hill’s Pet Nutrition in 2007.
Existing Emporia and Lyon County companies Detroit Diesel Remanufacturing, Hopkins Manufacturing, Dolly Madison, EVCO, Kansa, IBP (Tyson), VEKTEK, Advanced Mold & Tool, Glendo, Fanestil and Westar Energy have took advantage of economic development incentives to expand or make capital investments since 1995.
About 69 percent of voters approved the tax in 2000 with the money earmarked for industrial and economic development, property tax relief and an aquatic center. That tax ends Dec. 31, 2014. Even if the tax renewal fails Tuesday, it remains in effect for at least another four years and four months.
It’s all about jobs
Proponents of the sales tax renewal point to numbers Heermann calculated to show the impact of the tax:
- $693 million in new investment in buildings and equipment;
- 1,926,723 square feet of building construction;
- 1,063 new jobs.
The jobs figure can be somewhat deceiving, as the four companies in the industrial park employed 564 people at last count. At one point, they employed 1,063 people combined.
As elsewhere, workforce reductions have been a reality for these companies. Also, the number of Menu Foods jobs was slashed by more than half after wheat gluten issues arose in 2007 that led to recalls in dog and cat foods.
But things could be worse.
Longbine said sales tax provides a way to keep the number of jobs in Emporia steady even when a recession leads to layoffs.
“All businesses have life cycles where they add and subtract jobs,” Longbine said. “We have got to add jobs just as fast as we lose jobs. This gives us the resources to add the jobs.”
Incentives a way
of life
In today’s competitive marketplace, companies expect and may even demand goodies that make them more financially attractive to locate in a certain town. And cities are generally willing to comply because if they don’t, someone else will.
Longbine said incentives are the norm in Kansas communities, big or small.
“There’s communities much smaller than us that offer incentives,” he said.
In Emporia, incentives have taken many forms. Some type of tax abatement is usually a given, but capital investment assistance, free or reduced-price land and infrastructure support can be on the table.
“Incentives make a huge difference in terms of deal closure,” Heermann said.
Jason Beyer, vice president of operations for Menu Foods in Emporia, said, in his opinion, incentives are a must.
“A lot of local communities offer incentives,” he said. “From a competitiveness standpoint, incentives are extremely important.”
It’s up to the RDA board to decide what incentives are given and to ensure companies are following agreements about the number of jobs created and above-average wages.
“The RDA board must be good stewards of where to put taxpayer money,” Longbine said. “The community expects a return on investments.”
Why now and
why this?
At first glance, the timing of the sales tax renewal seems perplexing. The renewal won’t go into effect until 2015. The economy is soft, and the state sales tax just went up 1 percent on July 1. Longbine said paying 8.8 percent may not remain at that rate. The county half-cent sales tax for the jail likely will end before 2014, assuming bonds are paid off by then.
Heermann said by renewing the tax now, the city would have the ability to borrow money for future projects. Put another way, if investors knew the RDA couldn’t pay off bonds after 2014, they would be reluctant to lend money.
Of course, the other positive about putting the renewal on the ballot early is there would be plenty of time to try again if it fails.
“If we waited until 2013 and it failed, the city income would be $1 million less,” Heermann said.
With the aquatic park paid for, Heermann said from 2015 to 2024 the split between economic development and property tax relief would be 50-50.
Longbine said the city commission discussed whether to use future sales tax money on other projects, but decided against it.
“Economic development and property taxes relief were the two most important issues,” he said. “We didn’t want to cloud the issue for voters by putting on pet projects.”
Longbine said the residents he’s talked with have been supportive of the sales tax because of the value received and the reduction in property taxes.
Beyer said he’s in favor of the sales tax because it’s been used well.
“It’s got a good track record and done well for the community,” he said.
Tell (anonymous) says...
maybe Kent should take some pictures of a half occupied Tyson closed Modine closed Lenze closed Inginum can plant closed and never opened Bio diesel closed Didde not to mention all the lost retail business we just aren't keeping up.
We need new leadership! We do need the RDA.
July 28, 2010 at 9:39 p.m. ( permalink | suggest removal )
methusla (anonymous) says...
Tell and everyone else, this whole sales tax extension thing/vote is/was a done deal when it was thought up by the City, RDA, Emporians for growth, it is a given that the sales tax extension will be approved. What I don' t understand is why there was even a suggestion that it be put to a vote . There has been boasting of property tax relief . Has anyone seen any property tax relief from the present sales tax extension, I surely haven' t, in fact our property tax that we just paid was higher than a year ago, so where is this property tax relief eveyone is boasting about ? And just wait and see, the property tax levy will be increased, even if the sales tax is extended for another 10 years. Folks, thats just the way things are done in Emporia and have been for years. No one wants to face facts. You can spend , borrow your way to prosperity, especially when the economy of the whole damn country and Emporia is in the toilet .
July 28, 2010 at 10:19 p.m. ( permalink | suggest removal )
methusla (anonymous) says...
What I meant to say was, You can' t spend or borrow your way to prosperity, especially when the economy of the whole damn country and Emporia is in the toilet right now and who know for how long the economy will be in the toilet or down the sewer.
July 28, 2010 at 10:23 p.m. ( permalink | suggest removal )
methusla (anonymous) says...
And mark my words the City, RDA, Emporians for growth will be demanding another sales tax extension, and another and another and another. This vicious cycle or tax and spend is never ending .
July 28, 2010 at 10:28 p.m. ( permalink | suggest removal )
rabblerouser (anonymous) says...
As long as the city has to have elaborate court houses and water plants that look like mansions we will have more and more taxes. When did City, State and Federal buildings have to be so fancy and expensive. Morton buildings have served many of these services for years. Why do we now have to have Million Dollar court houses and buildings? And every service seems to want their own building. Let's combine a few and save some bucks. I noticed the other day that the county has their own noxious weed building and quads to run up and down the road spraying weeds. And why is the city wearing out those expensive John Deere mowers mowing along the Americus Road and the south end of the Prarie street overpass every 3 or 4 days outside the city limits? More waste. There is simply way too much waste in government and no accountabiliy. Their mindset is that it is not their money!
July 29, 2010 at 6:53 a.m. ( permalink | suggest removal )